TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.TBR EVENT PERSPECTIVEHuawei shifts attention from U.S. toICT unification f...
www.tbri.comTBREvent OverviewU.S. government restrictions complicate ability to realize ICTWhile Huawei’s Executive Vice P...
www.tbri.comTBRmarket to continue. Huawei is using its FusionCube converged infrastructure solution as ashowcase for the c...
www.tbri.comTBRCompanywide strategy moving forwardTo continue growing across all of its business segments, Huawei is seeki...
Upcoming SlideShare
Loading in...5
×

Huawei shifts attention from U.S. to ICT unification for revenue growth

1,370
-1

Published on

TBR believes Huawei, which is always investing for the long term, is focusing its research and development assets on technology unification. Huawei is investing in convergence and is seeking to develop combined ICT architectures and technologies. A good example of Huawei’s new strategy is SoftCom architecture, which focuses on FusionSphere, a unified operating system platform that orchestrates end-to-end system performance across the carrier and IT infrastructure. FusionSphere leverages commercial off-the-shelf hardware, developed with Intel, for a programmable chipset that consolidates routing, switching, servers and storage. Above the programmable hardware and FusionSphere OS layer is a middleware layer that enables network and application function virtualization. The new solution supports a customer investment model that reduces capex and opex by unifying numerous standalone infrastructure components.

Published in: Technology, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
1,370
On Slideshare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
25
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Huawei shifts attention from U.S. to ICT unification for revenue growth

  1. 1. TBRT ECH N O LO G Y B U SIN ESS RESEARCH , IN C.TBR EVENT PERSPECTIVEHuawei shifts attention from U.S. toICT unification for revenue growthHuawei Global Analyst SummitShenzhen, China, April 23–25, 2013Michael Sullivan-Trainor (michaels@tbri.com), Executive Analyst, Networking & Mobility PracticeChristian Perry, Senior Analyst, Computing PracticeTBR PerspectiveTBR believes Huawei, which is always investing for the long term, is focusing its research anddevelopment assets on technology unification. Huawei is investing in convergence and isseeking to develop combined ICT architectures and technologies. A good example of Huawei’snew strategy is SoftCom architecture, which focuses on FusionSphere, a unified operatingsystem platform that orchestrates end-to-end system performance across the carrier and ITinfrastructure. FusionSphere leverages commercial off-the-shelf hardware, developed withIntel, for a programmable chipset that consolidates routing, switching, servers and storage.Above the programmable hardware and FusionSphere OS layer is a middleware layer thatenables network and application function virtualization. The new solution supports a customerinvestment model that reduces capex and opex by unifying numerous standalone infrastructurecomponents.While it will take a few years to refine and commercialize the technology, Huawei’s decision isclear — it intends to be a one-stop shop for ICT and to lead with innovation that unifies andsimplifies end-to-end infrastructure. TBR believes this approach provides an opportunity fordifferentiation that can leapfrog today’s legacy suppliers. However, Huawei will face obstaclesin that solutions such as FusionSphere compete with industry defacto standards such asOpenStack, and although they align with customer needs, the solutions will be complex toimplement and manage with legacy infrastructure.
  2. 2. www.tbri.comTBREvent OverviewU.S. government restrictions complicate ability to realize ICTWhile Huawei’s Executive Vice President Eric Xu’s comment the company was no longer“interested” in growing its business in the U.S. market drew inordinate press coverage on thefirst day of Huawei’s analyst conference, the company focused on its strengths in growththough unifying its carrier and enterprise solutions and continuing to drive its mobile devicebusiness.With designs of dominating the ICT market on the same scale as Ericsson and IBM, Huawei’sinability to compete in the U.S. market due to government restrictions creates increasedpressure since the U.S. is the largest market for ICT and represents a significant share of totalspend by carriers and enterprises. The circumstance requires Huawei to grow more aggressivelyin Asia, EMEA and Latin America where the company is leveraging quickly its install base forexpansion.However, most of the revenue stems from the Carrier Business, whose growth has slowed inthe past year. Therefore, advances in Enterprise and Devices are crucial, as are initiatives suchas SoftCom, converged infrastructure, and network and data center transformation solutionsthat can address carrier and enterprise needs.Huawei experiences slower enterprise growth and limits U.S. spendIn the U.S., Huawei has slowed investment, pausing at 1,400 employees, 500 of which are inR&D. The shift in investment is not solely a result of the Carrier Business Group being blockedfrom doing business in the U.S.; Huawei has not succeeded in its Enterprise Business Group, lastyear’s major strategic thrust, on the scale it expected. The company revised its long-termoutlook for the Enterprise Business Group from $15 billion in 2017 to $10 billion, explainingthat it now has a more thorough understanding of the market. Yet hyper growth is still on theagenda with an expectation that revenue from enterprise will grow 45% in 2013 compared to25% year-to-year in 2012. Huawei displayed advances in its product lines for Enterprise servers,storage and networking but will also drive business growth outside of the U.S. market bybuilding its channel partners.Despite being in the enterprise market for only slightly more than two years, Huawei isexperiencing tremendous traction. Huawei executives noted the company has shipped morethan 470,000 servers to customers since 2008, while more than 2,000 customers use Huaweistorage. To address challenges in traditional storage architectures, such as complex lifecyclemanagement, inflexible data layouts and inefficient data sharing, Huawei is converging multipleelements of the storage ecosystem.By converging product technologies (including storage, analytics and archive in a single unit),lifecycle management, the software interface and protocols, the company is creating storagesystems that will resonate with customer demands for increased simplicity and flexibility intheir environments. These efforts will allow the company’s positive growth trend in the storage
  3. 3. www.tbri.comTBRmarket to continue. Huawei is using its FusionCube converged infrastructure solution as ashowcase for the company’s continued efforts around integrating hardware and software. WithFusionCube, Huawei combines server, storage, security and networking hardware withvirtualization, cloud and cloud management software to create a fully integrated experience forcustomers. Although the company faces plenty of competition in the converged infrastructurespace, it is going to market with a well-researched set of components designed to function as asingle, fluid unit. FusionCube will prove attractive to Huawei’s existing and potential data centercustomers who are looking for systems that can be managed and tuned as one entity.Devices also missed goalHuawei’s Consumer Device Business missed its 2012 goal of shipping 60 million smartphones in2012, shipping 32 million. The company missed its shipment goal partly because of its strategictransformation from an original design manufacturer (ODM) — designing devices that werelater branded and marketed by other operators and suppliers — to an original equipmentmanufacturer (OEM) — branding and offering its devices. The shift allowed Huawei to improvemargins and to offer high-end devices to better compete with Apple and Samsung. Huawei’sODM partners withdrew business during the transition. The OEM strategy is succeeding,however, enabling the company to achieve a top three position in devices in 4Q12 and settingexpectations the 60 million smartphone unit shipment target will be attained in 2013.Carrier Business Group shows steady growthThe entire company still aims to achieve $100 billion in revenue by 2020, and carrying theweight of growth is Huawei’s Carrier Business Group. While revenue growth was slower thanthe customary 20% annually Huawei experienced in past years, the company achieved growthin its major lines of business for the group, placing it second to Ericsson. Wireless salesincreased 6.7% in 2012 as carriers in China cut back spending on 2G and 3G equipment. ButHuawei is a leader in LTE, with more than 130 LTE/EPC contracts worldwide, and is positioningto become a leader in TD-LTE, the 4G technology of choice for China- and India-basedoperators. Huawei is a participant in China Mobile’s TD-LTE trial and will benefit from China’supcoming fixed broadband deployments as well LTE rollouts in Europe and Latin America.Huawei’s Fixed business declined 2.6% in 2012, but growth may resume in 2013 as Huaweideploys fiber for China Telecom. China is deploying more access lines than any othergeography.The group presented a solidified product and services strategy, showing solutions that are atthe front of industry trends, including LTE, small cells, heterogeneous networks, managedservices and customer experience management. The focus is on increasing customer accountpenetration and capturing growth opportunities outside of the U.S.
  4. 4. www.tbri.comTBRCompanywide strategy moving forwardTo continue growing across all of its business segments, Huawei is seeking to improve multiplefactors of its overall strategy. According to CT Johnson, Huawei’s corporate controller, thecompany will look to boost efficiency by improving the quality of contracts and strengtheningthe management of its operating assets while optimizing its governance and managementstructure. Huawei is also working to improve how it functions as an organization by delegatingmore authority. For example, frontline employees who are facing customers will have moreauthority to make decisions. Johnson also noted that Huawei will create a business ecosystemby ensuring stable and secure network operations, will actively protect intellectual propertyrights, will participate in industry standards and will continuously increase openness andtransparency.Overall, Huawei is well positioned to play a leading role in ICT unification solutions and in theCarrier and Devices Business groups. Though the Enterprise Business Group strategy willrequire additional time to mature, competitors in any of these segments must take Huaweiseriously.Technology Business Research, Inc. is a leading independent technology market research and consulting firmspecializing in the business and financial analyses of hardware, software, networking equipment, wireless, portaland professional services vendors. Serving a global clientele, TBR provides timely and accurate market research andbusiness intelligence in a format that is uniquely tailored to clients’ needs. TBR analysts are available to furtheraddress client-specific issues or information needs on an inquiry or proprietary consulting basis.TBR has been empowering corporate decision makers since 1996. For more information please visit www.tbri.com.©2013 Technology Business Research Inc. This report is based on information made available to the public by the vendor and other publicsources. No representation is made that this information is accurate or complete. Technology Business Research will not be held liable orresponsible for any decisions that are made based on this information. The information contained in this report and all other TBR products is notand should not be construed to be investment advice. TBR does not make any recommendations or provide any advice regarding the value,purchase, sale or retention of securities. This report is copyright-protected and supplied for the sole use of the recipient. Contact TechnologyBusiness Research, Inc. for permission to reproduce.

×